Trade Team Update

FOMC:

I really don't have much to say about the FOMC... rates were held steady as forecasted. The actual statement was a piece of trash. It said nothing about anything... the talking heads will coin it as a "balanced statement between downsides to growth and upsides to inflation..." Whatever.

The statement has not given the market anything to really work with. Bernanke said inflation was an eminent risk but should moderate over time. My opinion is that the Fed did not give the market any real reason to believe the Fed is seriously going to hike rates in the Fall.

It is important to note that Dallas Fed Fisher wanted to hike rates... he's my new Fed hero. If I could crack the Fed's skulls with a Louisville Slugger I'd probably only give Fisher a love tap... that's how much respect I gained for him today!

Bottomline -- I don't see this statement doing much to help the USD in the short-term...

EUR/USD:

We do have some dollar fundamentals tomorrow but I believe any moves we see will be based on the FOMC statement... remember, Frankfurt and London were already closed by the time the FOMC was released...

Tomorrow's dollar data shouldn't really do much to give the dollar a boost. It's possible Existing Home Sales prints with a slight upside surprise but I'm not placing bets on it.

As I indicated, I shorted the euro on the rise up today and will gladly hold on a swing basis. Fundamentally, all eyes will now be on Trichet... we got through the FOMC and now it's Trichet's turn to either put up or shut up.

He did indicate the ECB was not going into a rate hike cycle but this is not even really news, nobody was expecting them to. We get one more Trichet speech this week, so watch out for that.

I'm still holding euro longs and I believe we can test the 1.5720-1.5750 level next should the market sustain above the 1.5640 level and we see renewed momentum to give us an upward push.

After this afternoon's sharp rise up towards the 1.5700 level we're likely due for a bit of downside correction. Weak euro longs will be placing stops at and below the 1.5640 level and we could easily see the banks and brokers want to take out those stops before renewing a topside move.

Be warned the market is even more confused after today's FOMC... this could mean more ranging, more illogical moves, and more shenanigans until at least the ECB's next rate decision in July.

The euro is poised to make more upside gains but of course this will be left for the market to decide...